Positioning for Success

Why health reform is exposed to another cycle of failure
April 21, 2010 -- A recent article  about efforts to rein in Medicare costs through the newly formed Independent Payment Advisory Board is an interesting article in that it hints at the nature of the health reform challenge. But the lingering question is whether policymakers really understand?

I fear the "smartest people" in leadership positions underestimate the elusiveness of healthcare cost containment, otherwise they would not   advocate what they do with such certainty. "Pilots" are the best road to travel among the options as we need the experience of a proof of concept before imposing a largely irreversible and flawed solution on everyone. 
 
Just pause and think. If we have an unacceptable healthcare system today, it must be attributed to the leadership, laws, policies and regulations we have embraced in the past. We created this pickle, and the doubts about the ability of government to engineer us out of this are a credible concern.  
 
There is a concept of leadership referred to as “positioning.” The theory being that if the desired change is not properly positioned, failure is a high probability irrespective of the merits of the solution. 
 
The following are four of many positioning problems obstructing a successful healthcare solution:
 
1.      Should federal or state governments assume primary responsibility for system architecture?
 
Most would presume that this is an obvious assignment of government. Let’s rethink that a bit. This means “top-down” solutions constructed by committees; more shifting of the burden; limiting solutions to consensus, vested interests, and politics; ignoring the conflict that government has as a vested interest in the healthcare food chain; implementation at the hands of highly entitled public employees; and perhaps most importantly rendering government as lacking the credibility to judge its own work product.
 
The alternative role for government is to “enable” sustainable reform by inviting a full range of competitive alternatives from those who would likely be challenged to implement their own concepts. Reform proposals could be competitively evaluated and range from the system of another country, to the many variations of building a new system from scratch.
 
2.       Who owns the money that buys health care? 
 
Does it belong to the individual, the source of funds or the state?  Should the money be given to service providers as a lump sum or a global budget payment, relying on them to determine what should be   provided?  Attempting to proceed with a lack of resolution about this uncomfortable subject is a mistake. Capitation promotes control of the cash by the supply chain; pay for performance centers on the source of funding; and medical savings accounts on the individual. Could a "pilot" conceivably embrace all three without mass confusion? Who owns the money obviously drives who gets the right to say "no" and how regulation needs to work.
 
3.      Can costs be meaningfully reduced without a comprehensive reduction in healthcare compensation?  
 
Almost all healthcare costs are embedded in someone’s paycheck. A pilot could engage this subject from a regulatory or free market perspective. Society does not particularly like either option and would seek to sabotage both. The strategy embraced must comprehensively constrain compensation.
 
Consider the passion and programming we are putting behind incentive compensation for doctors. Why won’t this end up on the trash heap of capitation, gatekeeping; risk sharing, fee schedules and hold-backs as another unproductive idea? 
 
Do the math. If the new incentives were to change physician behavior producing a 20% favorable variation, doesn't 20% of about 25% of the premium dollar only achieve a 5% reduction of costs or about six months worth of health inflation?  Can we assume such a savings will lead to premium reductions by insurers?  Will physician income shrink without offsetting responses and while others increase their compensation?
 
4.      How does reform measure success? 
 
What are the metrics?  If you don't measure it, you’ll never achieve it. Politics will vigorously resist critical assessment. What independent assessment of the controversial Oregon Health Plan has been undertaken by its political sponsorship? In measurable terms, who understands what the current health reform law is expected to achieve and by when? What objective organization has been engaged to articulate and measure the outcomes?  

I am not overly optimistic largely because of the poor "positioning."  Positioning can be everything.
 

Stephen Gregg is a retired hospital administrator. He can be reached at [email protected].

 

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